In yet another round of government and legal “ping pong” regarding the Corporate Transparency Act (CTA) and its reporting rule for beneficial ownership information (Reporting Rule), the Fifth Circuit has reversed its December 23, 2024 order, meaning the CTA and Reporting Rule are once again paused.
As we shared in our recent blog post, on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s motion to stay a preliminary injunction while the appeal on the constitutionality of the CTA and Reporting Rule continues. This ruling reinstated the CTA’s enforcement and set a January 1, 2025 deadline for existing reporting companies to file beneficial ownership information (BOI) reports, prompting the Financial Crimes Enforcement Network (FinCEN) to extend filing deadlines for most companies to January 13, 2025.
However, in an unexpected turn, the Fifth Circuit reversed its decision on December 26, 2024, effectively pausing the CTA and its Reporting Rule once again. As of now, reporting companies are not required to file BOI reports. The Fifth Circuit provided limited reasoning for the reversal, stating:
“The merits panel now has the appeal, which remains expedited, and a briefing schedule will issue forthwith. However, in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments, that part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED.”
In addition, FinCEN posted a response to the latest reinstatement of the national injunction, and consistent with prior postings they are saying compliance is currently allowed but not required.
“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
With the latest decision, deadlines remain in flux, and further legal developments could alter the enforcement status of the CTA. An oral argument on the CTA’s constitutionality is scheduled for March 25, 2025, leaving it uncertain whether the stay will remain in effect until then. Given this uncertainty, we encourage you to consult legal counsel to understand how these changes may impact your specific situation. Additionally, it’s wise to have your beneficial ownership information prepared for filing, should the CTA and Reporting Rule be reinstated.
As this unprecedented legal saga continues to unfold, look to Bridgeford Trust Company for updates on this rapidly evolving situation. Visit our CTA Resource Page for the latest information, and if you have any questions or need assistance, please reach out to us via our contact form or by calling (605) 224-9189.
